Refund of RCM, Goods and Services Tax - GST

[Vineet Agrawal]

During the F.Y. 2017-18, I had paid RCM wrongly under the heads of CGST and SGST. I had even claimed ITC under those heads. While reconciling with GSTR 2A, I came to know that I was liable to pay IGST instead of CGST and SGST.

Can I claim refund of CGST and SGST now (provided that I make IGST payment)

What will be the position of ITC claimed earlier?

Posts / Replies

[Alkesh Jani]

Shri

Please refer Circular No.162/2021 -GST dated 25th September, 2021. Hope it may help you.

Thanks

[Amit Agrawal]

While you can claim pay taxes under correct head and claim refund of taxes under wrong head, things / implications are very clear - under law - about ITC availed earlier (against taxes paid under wrong head, which gets refunded) and availability of ITC now (against taxes that will be paid now under correct head).

Considering the fact that you have availed ITC against wrongly paid under RCM under the heads of CGST and SGST, I do not see any great point in claiming refund thereof.

W.r.t. payment of taxes under wrong heads during FY 17-18, unless & until Dept. finds this mistake (through audit / investigation etc.), it is better not to do anything and hope that time-limit to issue SCN u/s 73 gets lapsed before Dept. finds said mistake.

Assuming that issue remains undetected till date by Dept., only point / risk favouring claiming refund is time-limit i.e. 23.09.2021 to claim subject refund whereas time-limit (i.e. revised & as of now, which can be extended by Govt. if they so want) to issue notice u/s 73 for FY 17-18 is 30.09.2021. So, your risk, as of now, is what happens in next one week (i.e. if Dept. issues SCN by 30.09.2021) when you do not claim refund till 23.09.2021.

Of-course, if Dept. detects error prior to 23.09.2021, your entire strategy will need a re-visit.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Shilpi Jain]

For 2017-18 the department can issue order denying the credit/requiring payment of tax max by end of Sep '23. (Demand under extended period (i.e. 5 years) will not survive as it is a revenue neutral situation)

So if you cross this period, you can leave it as it is.

[Amit Agrawal]

In my post above, please read 1st Para as follows:

.......................... things / implications are very unclear ..................

[Padmanathan Kollengode]

I agree with views of expert. Since whole situation is revenue neutral, it is better to leave it as it is. In case department issues a SCN consider the following:


You may refer to decision of Honble CESTAT in BAJAJ ALLIANZ GENERAL INSURANCE CO LTD VERSUS COMMISSIONER OF CENTRAL EXCISE 2014 (8) TMI 787 - CESTAT MUMBAI wherein the CESTAT held that the credit is taken by the appellant is nothing but the refund of RCM erroneously paid by them.

Placing reliance on the above decision, you can take a stand that CGST + SGST credit availed by you is nothing but refund of CGST + SGST wrongly paid by you.

Regarding IGST, you can pay RCM under IGST by raising self-invoice now and avail also ITC of IGST (this is discussed and debated at great length in this forum see Issue Id: - 117652 .

[Amit Agrawal]

While I continue to hold my views as explained in this forum in Issue Id: - 117652 , following changes in Section 39 (9) (which happened on 01.10.2022 i.e. after sharing those views of mine) & risks thereof needs to be kept in mind while presenting defence:

As the start of Section 39 (9), the words "Subject to the provisions of sections 37 and 38, if" were substituted with "Where" w.e.f. 01.10.2022. And Section 39 (9) now reads as follows:

"[Where] any registered person after furnishing a return under sub-section (1) or sub-section (2) or sub-section (3) or sub-section (4) or sub-section (5) discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars ⁵[in such form and manner as may be perscribed], subject to payment of interest under this Act:

Provided that no such rectification of any omission or incorrect particulars shall be allowed after ¹²[the thirtieth day of November] following ⁶[the end of the financial year to which such details pertain], or the actual date of furnishing of relevant annual return, whichever is earlier."

Needless to say and at the cost of repetition, I continue to hold my views as explained in this forum in Issue Id: - 117652 despite changes in Section 39 (9) (which happened on 01.10.2022 i.e. after sharing those views of mine).

I am just explaining added complexities to my arguments / reasoning, specially where self-invoice was not raised at the initial time of receipt of goods / services when RCM liability existed.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Aditya Gondiker]

I am in agreement with the experts view as provided in the replies.

Further, i would also like to point out that whether tax is paid under the head IGST or CGST + SGST in case of RCM the 50% portion of tax would anyways accrue to state wherein the services are consumed.

Ex: ABC Pvt Ltd received legal services from PQR Legal firm from Mumbai. In the said case ideally ABC was required to remit IGST. Suppose due IGST was discharged the 50% tax revenue in the said transaction would accrue to the state of Telangana. Even if ABC due to inadvertent error discharges CGST and SGST the said revenue has accrued to the state of Telangana.

Therefore, the issue of revenue being accrued to a different state does not arise in the case of RCM payment.